GOVERNMENT MAY IMPLEMENT 07TH PAY COMMISSION AWARD BY MIDDLE OF THE YEAR RATHER THAN FROM APRIL 01, 2016: BOFA-ML BELIEVES

NEW DELHI: The Seventh Pay Commission and the one-rank-one-pension scheme have long been seen by experts on the Dalal Street as the next big catalysts to spur consumer demand and, therefore, growth in the economy.

"The implementation of the Seventh Pay Commission (CPC) recommendations and OROP has been widely anticipated as a significant stimulus for Indian consumption in FY17. With total expected additional government spend of Rs 1.2 lakh crore (or more) this is forecast to be a strong driver of domestic growth in an otherwise weak external environment," global investment bank Bank of America-Meryll Lynch said in a report.

The Budget 2016, though, dampened some of the euphoria as the finance ministry shied away from providing a complete roadmap for the rollout of the pay panel award. According to estimates, the Finance Minister has only allotted Rs 65,000-70,000 crore in the Budget for the same.

"This should be a meaningful stimulus by itself (about 0.5 per cent of GDP). Any upward revision - on government revenue buoyancy (taxes, success of the voluntary disclosure scheme) could lead to upside," the investment bank said.

BofA believes there is a possibility that the government may implement the pay commission award by the middle of the forthcoming financial year rather than from April 1, 2016 and may pay the arrears in a staggered manner stretching into FY2018.

"Such a delayed/spreadout implementation of the CPC recommendations dissipates the potential consumption catalyst somewhat; yet - at 0.5 per cent of GDP - Rs 65,000 crore are meaningful amounts; and should provide meaningful stimulus near term," the bank said.

Here are the top seven stocks BofA-ML believes will benefit the most from the windfall to the consumers: The Economic Times